IDFC FIRST Bank reported a 53 per cent year-on-year (yoy) decline in third quarter (Q3FY25) standalone net profit at ₹339 crore due to a spike in provisions, including towards higher slippages in the microfinance loan book.

The private sector lender had reported a net profit of ₹716 crore in the year ago quarter. Net profit in the reporting quarter grew 69 per cent Quarter-on-Quarter from ₹201 crore in Q2 FY25.

Net interest income (difference between interest earned and interest expended) in the reporting quarter was up 14 per cent y-o-y at ₹4902 crore (₹4287 crore in the year ago period).

Other Income, including non-fund based income, fees, earnings from foreign exchange and derivative transactions, profit / loss from sale/ settlement of Investments and derivatives, marked to market provisions on investments/ derivatives, dividend from subsidiary etc, rose 20 per cent y-o-y to ₹1757 crore (₹1469 crore).

Provisions soared 104 per cent y-o-y to ₹1338 crore (₹655 crore), driven by higher slippages in the microfinance book.

Net Interest Margin (NIM) declined to 6.04 per cent for Q3FY25 as compared to 6.42 in Q3FY24. The Bank said NIM decreased during the quarter largely due to decline in the microfinance business and increase in composition of wholesale banking business.

Gross Non-Performing Assets (NPAs) nudged up a shade to 1.94 per cent of gross advances as at December-end 2024 against 1.92 per cent as at September-end 2024. Net NPAs increased marginally to 0.52 per cent of net advances against 0.48 per cent.

V Vaidyanathan, MD & CEO, said: “We are specifically tracking microfinance loan book closely considering the industry situation. The asset quality of the overall Bank’s loan book is stable...Excluding the micro-finance loan book, the GNPA and NNPA of the book of the bank is even lower 1.81 per cent and 0.49 per cent .”

Credit issues

He noted that credit issues in the microfinance segment is transitionary and is likely to be resolved within a few quarters. Moreover, the Bank built the microfinance business because it was important from priority sector lending (PSL) norms point of view.

Gross advances were up about 22 per cent y-o-y to ₹2,31,074 crore as at December-end 2024, with the business finance segment (CV/CE financing, Business Banking and Corporate loans) growing about 34 per cent, followed by retail finance (21 per cent) and rural finance (5 per cent).

Within rural finance, the microfinance portfolio de-grew 19 per cent y-o-y to ₹10,997 crore (₹13,634 crore). The Bank’s legacy infrastructure book reduced by 15 per cent y-o-y to ₹2,546 crore as of December 31, 2024.

Deposits grew by a robust 29 per cent y-o-y to ₹2,27,316 crore. As at December-end 2024, low-cost CASA deposits declined to 47.7 per cent of total deposits from 48.44 per cent as at December-end 2023.

Published on January 25, 2025